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An Independent Community Health System Carves Its Own Niche

Philip Betbeze, for HealthLeaders Media, February 21, 2014

The chief operating officer of a small Minnesota health system says that small organizations can—and must—be among the leaders of the transformation from volume- to value-based healthcare businesses.

Michael Phelps—no, not that Michael Phelps—is convinced his small health system in Minnesota won't be left behind as its healthcare customers seek greater quality and value in the services they consume.

As I've mentioned many times before in this space, transforming from a volume-based business to a value-based one is monumentally complex. Most small systems are following the trend, rather than leading it, often out of necessity.

Phelps, who's the chief operating officer at Ridgeview Medical Center and Ridgeview Clinics in Waconia, MN, a small organization by most standards, has a different take. He says that small systems can—and must—be among the leaders of the transformation.

In a small system with a commensurately small war chest, however, it must be done selectively, choosing which modifications to the business model will work well in a future of value-based purchasing of healthcare services, as well as which will improve quality or efficiency regardless of the payer reimbursement protocol.

By changing rapidly, he risks being early, he risks that his system's initiatives will miss their targets, and he risks that Ridgeview won't be able to compete with bigger health systems despite the investments. In other words, he characterizes the health system's business strategy bets as "life-and-death." But he contends that these choices must be made—leadership won't stand by as the health system becomes an anachronism.

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